Hachette pushing Amazon for price hike, to take Apple model
updated 08:15 am EST, Fri February 5, 2010
Hachette echoes Macmillan in e-book price war
Hachette today followed Macmillan's pricing strategy and said it would raise prices on its e-books. The approach will use the agency model where the publisher, not the retailer, sets the prices. It will notably use the Apple price scheme and ask between $13 and $15 for new and bestselling titles as well as change prices over time, with some older and shorter titles costing as little as $6.
The move effectively forces Amazon to raise the prices on Hachette's books at the Kindle store beyond their existing $10. Although yet to return Macmillan's books to the service, Amazon has said it would reluctantly increase prices after that publisher's demands and would let customers decide whether the increases are worthwhile. The online bookseller is unlikely to have a choice as it would suffer a severe blow in risking the loss of more than one publisher.
Both calls for change come just after Apple has unveiled the iPad and suggest that publishers are using the new book-friendly device as an opportunity to escape what they have seen as a constrictive pricing model at Amazon. Although they will sometimes make less money since Apple isn't paying a wholesale-level price to publishers, the move gives Hachette and others control over how their books are priced and thus will let them charge more if it becomes necessary. The Kindle approach sells books at a loss to Amazon and gives publishers little room to ask for more since Amazon is unlikely to deepen its losses further to maintain the $10 price.
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Joined: Dec 2005
The Future of Controllers of eBook Prices?
With the iPad, the book publishers may have a real tool to make eBooks sell in large volume. That assumes iPad becomes the rage people are hoping for. Does anyone think they'll ever go for the more sales at large volume and lower price point if the iPad becomes a hit?
So far, even with the plethora of overhead costs lopped out of the loop, publishers still want to charge near-hardcover rates for digital copies of books AND overload them with DRM. Something would have to change their mind.
With music labels, Apple took a hard stance from the get-go on a single-line price for everything that the iTMS carried. This along with the store's success became a bargaining chip for Apple to keep the content at that price. Apple is obviously not taking that tact here, so it probably won't have the ability to lower prices or get rid of DRM on its own unless it changes the terms of future contracts.
This leaves it up to a publisher with a wildly popular product to go for the large volume/low price business model and win out over the opposing model to change minds in the publishing industry.
In terms of DRM, publishers don't yet have to deal with piracy of alternative products; it takes a investment of a little money and a fair amount of time to get a paper book to a digital copy as you would a CD into your computer's music library. However, as we have seen repeatedly with digital music, and already with some eBooks, prohibitive DRM is always eventually broken.
I think it'll be interesting to see if its the artificial controller- Apple, or the market that drives popular business models in this industry in the future.